When incorporating your small business, there are tough decisions to be made. Are you forming a nonprofit corporation, Limited Liability Company (LLC), C Corporation, or S Corporation? What’s the official name? Copyrights?
One of the very first decisions after selecting an entity type is deciding where to incorporate?
If your corporation primarily conducts business in one state, the state where your do most of your business is your “home state” which is typically the easiest and cheapest location to incorporate. Here’s why: If you choose to incorporate in another state besides your home state, you will have to file and qualify for foreign corporation status, you will need a registered agent in each state, and you will be subject to the taxes and fees for each state (both the home state and where your small business is foreign qualified).
For most small businesses, it’s best it incorporate in your own state, even if incorporating in a neighboring state would seemingly cost less. It’s those little taxes, fees, and costs that add up after a while!
Foreign Qualified Corporation
If you conduct business in multiple states on a regular basis, you can select any of these states to incorporate your business. As you’re selecting, remember that you must actually conduct business within the state you choose.
Choosing a State for Incorporation
While you’re comparing the advantages of incorporating in one state versus the other, here are a few things to consider:
- Tax requirements for foreign corporations
- Initial starting fees
- Ongoing state taxes and fees
- State corporate income taxes
As your weighing the pros and cons of each state, take a look at states with the best business tax climate. At MaxFilings, we’re here to help in any way we can. Incorporate online now or give us a call at (888) 978-8426.